The End of You; The Start of YOU


Office 365 to Partners: “Lower your shields and surrender your clients. Your culture will adapt to service us. Resistance is futile.”

There, I saved you an hour and a trip to Los Angeles for Microsoft WPC.

Several years ago when Microsoft first announced their cloud ambitions they briefed the press using the term co-ownership. Under this new concept, Microsoft and the Microsoft Partner (ie, you) would co-own the client: Microsoft would service, bill, support and well.. do everything – you would get a 6% commission for nodding when the client asked if the product would fit their needs. Effectively, it was a license to kill the Microsoft Infrastructure Partner.

If you didn’t tune in to the Office 365 launch here is the summary:


The eulogy was delivered by Ballmer himself who no fewer than 14 times repeated that Office 365 is something you don’t need an IT department or an IT person to do. The message to the partner base was clearer than ever:

There is an opportunity to build a business around migrating clients from their old “need IT help” solution into the Microsoft cloud. Then climb on in and close down the lid.

Take it on and it will be your last IT project ever. This is the end of you.

The Start of YOU

The introduction to this post isn’t meant to smear Microsoft or shine a negative light on their business model, frankly this is the best option they have and in my humble opinion the correct one. It’s also nothing new. The world of technology is turning towards services – you don’t get to pad a cell phone bill with a 100% margin. Unless your clients are unusually bad at math – you don’t get to lease them hardware at an insane margin or the kind of interest rate that required the act of congress to limit banks from charging. You don’t get to build an enterprise network in a small business and make them pay Fortune 500 fees for running their IT. We have all built our businesses on that but there are two problems with it:

1. The pool of stupid people is shrinking. Ten years ago you needed an associate degree in MIS to send and print an email. Now your grandma does it from her phone.

2. The number of options and alternatives is growing. Ten years ago you had to build a network and you had a choice of one telco provider. Today you have at least four and that’s just in your pocket. And you don’t need to read an O’Reilly book to get to the Internet, you can go to a Verizon store.

Don’t take it personal, Microsoft didn’t build this coffin for you. Microsoft built it for Google Apps. Google Apps on the other hand built it to support their search business. The string of .com’s and Web 2.0’s and giant telco and media and entertainment companies that benefited from connectivity that we all wanted and we all willingly paid for.. for the simple human need for a sense of belonging (in geek terms: connectivity).

For all intents and purposes, this is a good thing. It’s time to accept it and move on – don’t sit there asking for Microsoft to let you bill the client, don’t sit there and blame them for excluding you from their products and most of all – don’t wait for someone else to solve the problem that isn’t theirs.

But some of you can’t let go of Microsoft. Here are Top 10 reasons why Microsoft should not allow partners into Office 365:

1. Control of experience: This isn’t a matter of controlling the billing, it’s a matter of controlling the experience. Microsoft is responsible for the promotion, sale, support and upselling the clients through their system.
2. Upselling: Microsoft has not been extremely successful with it’s partner base loyalty beyond what they built: Office and Windows. If Microsoft pulls off #1 well it stands to reason that it’s other properties will do much better without partners trying to pull the client towards the solution they get most margin on. (Hint: Notice how many times you saw Windows Phone yesterday?)
3. Cross Selling: Microsoft is more than Office 365. It has always had the ambition of becoming everything to everyone but it has always had partners that stood in their way – from infrastructure to hardware to service provider – everyone always wanted their logo there. If Office 360 works out, it would be easier to position hardware, services, consulting and more.
4. Ground Rules: In the traditional network, IT department calls the shots. In Office 360, Microsoft does. Their terms. Their rules. Their features. Their network maintenance levels. By removing intermediaries, things become much simpler.
5. Patents, Patents, Patents: Microsoft is the richest software company on the planet and thereby the biggest target of patent lawsuits. When you’re playing in an open market you have to step on some toes to gain share – when you police the ocean (Office 365) you can easily keep others out.
6. Revenue Flexibility: With Microsoft controlling the billing and the client, they can control the price and the offering. Microsoft’s entire business model is built on multiple revenue streams off the same code base. With ultimate control comes the ability to tier the cloud and make even more money as companies get bigger.
7. Migration non-interference: Microsoft’s name is on the bill – it’s who you call when you have a question or need advice. Microsoft will never sell a migration from Office 365 to IBM’s hosted Lotus Notes solution.
8. Identity: Remember Microsoft Hailstorm? By having complete control of the client they have complete control of each licensed seat’s identity: One that extends to their Xbox, Bing, Windows Phone, etc. At this point features become irrelevant: You’re more likely to buy something that fits than something that looks cool or fits the business model a little better.
9. Simplicity: Microsoft beat Apple by being open and allowing everyone that could write drivers to use their system. By locking out partners here Microsoft becomes that trusted advisor: Recommending apps, solutions, implementations and even suggesting your vacation. They don’t have to fight their way past the IT department to roll out ActiveX controls or the next technology they want to.
10. Borg: The collective has not been growing. Look at Microsoft’s 10 year stock chart and you can see why people are starting to demand Ballmers head and why so many in the Microsoft’s leadership have been sacked. Cloud bet is huge and partner resistence is futile – Microsoft wants to own SMB computing. At 90% they pretty much fulfilled Bill Gates vision of every computer running a Microsoft OS – but for the price to climb to fulfill Steve Ballmers vision of maximized shareholder value – everyone must be assimilated.

You’ve got the same story over at Google. So go ahead channel, resell Microsoft and Google – I dare you!

Of course, things are only this simple if we ignore the reality.

The Reality

Picture is worth a thousand words:


You see, the Google & Microsoft & Apple vision only holds up in their marketing.

In the real world where most computers are s#@(, applications are written in India and business owners are cheap trying to save $100 on their Internet connection the same day they have to decide if they want to drop $8,000 for the Dayona seats in their Ferrari (don’t hate, I told you this stuff was gonna happen in 2007) the computing experience tends to suck.

Yet, millions and millions of people bought an iPhone despite the fact it’s the most locked down solution and just about the only phone whose worst feature is it’s ability to place a phone call.

The point here is that there are years upon years of profitable IT business to be done if you stop focusing on what everyone else is doing and start thinking about what you can do.

Now to all my Microsoft friends and their managers that got this forwarded to them, here is your problem.

Your partner base feels they brought you to this point and that you’re being outright rude to lock us out of your success because we’ve been abused as your customer service department for years. For us, the argument is more emotional than it is factual. You’re dumping us and telling us that you’re gonna marry our best friend at the same time that you’re asking us to pay for your honeymoon trip in Tahiti.

Now that we all understand each other, let me say something that I’ve been saying for years.

The Start of YOU

Let’s face it friends, we’ve had it easy for years. Microsoft spent billions of dollars in marketing and making our clients want the solutions they were building. All we had to do is set it up and hope it doesn’t blow up at 9AM. Which it did. Again and again. But things got better.

As big of an opportunity as Microsoft sees in the cloud, I see an even bigger one for each and every one of us. What you sell now is not Microsoft or Windows or Android.

Now you’re selling you.

The focal point is no longer the solution. No longer the price. No longer the business card with the trail of software vendors and certifications nobody but IT staff has ever heard of. The focal point is you.

“I’m going to get you everything you need. If you don’t like it, I’ll bring you something else. The point is, you’re paying me so you don’t have to do it yourself. And my time costs a heck of a lot less than yours and I’m going to make sure it stays that way.”

In the Fortune 500 marketing, Microsoft is fighting with Google who is fighting with Apple who is fighting with Samsung and they are all fighting for a market dominance 10 years from now.

My name is Vlad and I’m here to help you build your cloud business today, the same way I do for over 20,000 other IT businesses. Go here. Then email me at We let you control the billing, the solution, the features, the implementation and if you’re insane enough – the maintenance cycle itself. It’s the cloud on your terms on your brand and your price. We just take on the responsibility to keep it up, back you with an SLA, financial and legal liability and one more thing – We’ve been doing it for 14 years.

It’s time we all thank Microsoft for a great ride and amazing software and solutions. But now it’s time we take it from here ourselves and accept that partnerships don’t last forever and business is a game of strategy and opportunity – and in my unbiased and humble opinion – I’ve got one.

Who loves ya baby?

12 Responses to The End of You; The Start of YOU

  1. RandyS says:

    Yet, millions and millions of people bought an iPhone despite the fact it’s the most locked down solution and just about the only phone whose worst feature is it’s ability to place a phone call.

    Great point on the iPhone and very illustrative of what people want.

    IMHO, until the cohort of ‘youngsters’ who have grown up with computers become business owners, there will still be a strong need for “us”. The window of opportunity for the current paradigm is probably 10 more years.

    Microsoft (and even Google) sees this trend and knows that the coming tsunami is fickle and not very loyal. MS and G are throwing everything against the wall and seeing what, if anything, sticks.

    We solution providers are supposed to make all of this stuff work. Who has the time to learn it all? Where do you get support? Who wants to pay us big $$$ to learn something you can get for $6/mo or for free?

    When you break it all down, what 98% of businesses want is: working email, no spam, security from malware, mobile device email works and integrates perfectly, printers print AND they want their LOB app to work and be available for everyone 24/7.

    That, is the holy grail, and to the extent that OWN can make the first 4 items work, it is all GOOD. And to the extent that WE can make it all look easy and be there for them whenever they have a question, it is all GREAT.

  2. Vlad Mazek says:

    Absolutely agree.


  3. Ryan Morris says:

    Good point, Vlad. The core strategy for Microsoft is to own the end user through an agent community. It worked for telco providers because the service was a universal requirement built on a ubiquitous delivery platform. Sound a little like the “cloud” story today? The service level wasn’t ever actually good – everyone complains about the phone company and it’s terrible technical + customer service – but it was good enough. And that’s where basic apps / network connectivity are headed.

    For years I’ve asked why every business customer that buys IT is required to employ a department of IT specialists to keep systems functioning, yet no customers who buy cars are required to employ a department of mechanical specialists to keep those systems running. Is one system any more complex than the other? Or is one just more integrated than the other?

    IT pros have thrived for decades in a world where systems were deliberately dis-integrated at the point of acquisition – requiring re-integration before any of the parts could provide value. Think about it: what is the real ROI of a network … without apps running on it … without servers to run the apps … without storage behind the data … without end points to access the systems … without security … without reliable electricity? Ummm … none.

    Bottom line: customers have been content to buy and integrate and maintain and support and evolve their IT systems in a dis-integrated environment because there was no other option; now that there are other options, many will gladly opt in to an integrated solution where all they have to do is get in, turn the key, and drive away. Partner loyalty be damned.

    Open question: what happens to IT solution providers in a world where technology arrives pre-integrated in the form of a service? Seems to me there are three options: first, learn to run a high-volume agent model on single-digit margins; second, target the shrinking but always present niche of high-value customers who will continue to require custom solutions; third, learn to get paid for things not connected to the transaction / integration of technology.

    One option that will no longer be available: the status quo of a reseller business model. When will that reality actually occur? To borrow a line from the Smiths: How soon is now?

  4. Kerry Brown says:

    I like the analogy using cars. Few if any SMB businesses employ a fleet manager. The vast majority use a local repair shop. The maintenance requirements for cars has changed over the years. They used to require constant adjustments. Now they’re mostly managed by an onboard computer that makes these adjustments. Independent auto repair shops still exist. Cars still break down. The skills needed by the technician have changed but there is still a need for the technicians. The SMB owner may still seek advice from the repair shop owner or manager when contemplating a new purchase or deciding if a new purchase is warranted. Does this sound familiar? Is this a model that could be applied to the SMB IT consultant? Become your client’s trusted advisor even though you may not charge for this service. If you get this right you’ll get the client’s maintenance business. If the auto repair industry can make this work why can’t we?

  5. Excellent points Vlad, it’s a problem inherent in many cloud offerings: who owns the customer. Each client relationship should be considered an asset, a business investment that will continue to mature over the years. When you hand that off to Microsoft or Google (or any other third-party), you’ve basically handed over the keys to your business. There are a number of vendors and service suppliers who support the channel without limiting you to an agent status. It seems like a great time for MSPs to shop around!

  6. Vlad Mazek says:

    I’ve debated this with people over and over and most (wrong) folks tend to be hung up on inability to accept the fact that things have changed.

    In terms what will work – financially, it would have to be volume and transaction based. And here is my basis for the argument – the amount of experience needed to customize some of this stuff is immense and ever growing – and available worldwide. So let’s say your new business is customizing iPhone app – well, that can also be done on contract by someone in the third world for 1/10th the cost. So the “skill” strategy won’t work.

    On the opposite side there is the “there will always be a place for us” – well, not quite, not without volume. The problem is not that everyone will go to the cloud – not everyone will. But locating people that are staying out AND being able to charge them a high rate for services will be extremely difficult. In this scenario you don’t have to deal with India, but you have to deal with both local and regional competition that (at scale) will be more price competitive and competent at marketing and sales.

    So that is the divergence as I see it, the argument is no longer IF something is happening, it’s how you get a piece of that pie.


  7. Vlad Mazek says:

    It sounds like a good idea 🙂

    I can tell you from experience that it doesn’t happen. At least not at Own Web Now / ExchangeDefender – we get the calls AFTER the MSPs client has been solicited by Microsoft or Google which of course is a day too late.

    And… I’m sad to say, but all of those “we are their trusted advisor, they will do what we say” happen to lose to Microsoft and Google. People with years and years worth of business relationships go down when it comes to money.


  8. Glen R says:

    Good point Vlad, but I have been looking at this for the last 5 years and someone finally gets it.

    IT is a service always was, and always will be. The winners of the IT outsourced model (and inside service) will be the ones who understand we service our customers, and the better we do our job, the less our customers need us. We don’t need a plumber every week for our sinks, tubs, toilets, dishwashers, washers & etc.

    Microsoft wants the end user licensing headache? Let them have it! Microsoft wants to handle the exchange store services and pricing!? Let them have it! Sitting in a room with one of my clients and adding up Microsoft Office Licenses, and then the hours of conversation about worrying about the cost difference between Pro VS Basic VS enterprise etc. Let them have that headache.

    My time is better spent helping my clients make the most out of what they are spending on technology and how it applies to their business model, and their operations. For some clients the cloud is not the way to go, and for others it makes perfect sense. It is my experience and insight that they are paying for. They are also paying me to stand by them, guide them, and support them fanatically. Not to be the second set of hands on Microsoft’s money.

    Microsoft is simply a vendor, a large vendor. Hey, Ernie Ball dumped Microsoft and went all Linux and open source software. If the shoe fits, wear it.

    My name is Glen, my clients choose me because I work myself until the dark of night for them. They choose me because I look out for their interests, and always have THEM on my mind. My clients reward me by calling on me. My clients choose ME and they do so because I am awesome.

    (hence why I am at this blog, I stay up reading vendor propaganda to see how it benefits my clients, or myself).

  9. Dean says:

    “When you break it all down, what 98% of businesses want is: working email, no spam, security from malware, mobile device email works and integrates perfectly, printers print AND they want their LOB app to work and be available for everyone 24/7.”


    What 98% of businesses want is to make a profit. Actually 100%. They don’t want and never have wanted computers. They also never wanted copy machines, calculators, filing cabinets, paperclips or any of the other things they have to purchase that takes away from thier profit. They only have those things because they have to have those things. If they could avoid having to spend money on any one of them they would.

  10. Hey Vlad, lesson I learned when I first got into the IT business Vlad. We will make more money consulting than selling. Glad to see I was on the right path 15 years ago when I learned the roles of the President of an Oil company and how he or she uses IT each day. Designed a solution to meet their needs and supported them throughout the process. Exchange Server down the hall or in your data centre doesn’t matter. The client still needs help and understanding on how they can build their own empire using technology.

    Let’s face it…we had this debate years ago with DELL. What’s new today?


    Stuart Crawford
    Toronto, ON

  11. RandyS says:


    You are technically correct, but given the fact that they have the email and the spam and the iPhones and the Droids and the LOB apps, they want them to work. Hell, they don’t like stroking a check to the electric company to the tune of $600 per month or Verizon for $2500 per month but they do it because they must (or they could work out of a cave in Afghanistan.)

    Since they have the stuff, they want it to work efficiently and if we can provide that service at a price that doesn’t take their breath away, then it becomes a mutually beneficial, uneasy truce.

    BUT, once they figure out that they don’t need us… Bye Bye. Friends or not, trusted advisor or not.

    It’s just business.

  12. Dean says:

    “or they could work out of a cave in Afghanistan”

    That’s where the U.S. is headed isn’t it ? Seems that way to me. Or at least caves in the U.S. or Mexico.

    Capitalism is not about doing the right thing, or having fun or enjoying life. It’s about the constant pursuit of profit using the least cost means available.

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